TaxTMI 
TaxTMI 
Finance Act, 2007 - Explanatory Notes on provisions relating to Direct Taxes
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.... Exemption for income of Central Electricity Regulatory Commission. 11.1-11.2 10(23C)(iv), 10(23C)(v), 10(23C) Second, nineth, thirteenth and sixteenth proviso, 143(3) Sub-clause (ii) of first proviso, 296. Substitution of the power of notification of certain charitable and religious entities by power of approval by the prescribed authority. 12.1-12.5 10(23EC). Exemption for certain incomes of investor protection fund set up by commodity exchanges. 13.1-13.4 10(23FB), 10(23FB) Clause (c) of Explanation 1. Exemption for certain income of a venture capital company or venture capital fund. 14.1-14.3 10AA(4). Tax benefit only for new unit in SEZ. 15.1-15.6 12A(a), 12A(aa), 12A(1), 12A(2), 12AA(1), 12AA(2). Removal of the requirement for charitable or religious trust or institutions to file for registration within one year of creation or establishment. 16.1-16.7 13(1)(d)(iii) Allowing share investment in certain cases as a permissible investment mode for a trust or institution. 17.1-17.5 17(2)(ii) Explanation 1, Explanation 2, Explanation 3, 17(1)(iii) proviso. Clari....
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....uction for amount of interest paid on a loan taken for higher education of a 'relative'. 33.1-33.3 80-IA Explanation. Clarification regarding developer with reference to infrastructure facility, industrial park, etc. for the purposes of section 80-IA. 34.1-34.4 80-IA(12A). Tax benefit under section 80-IA not available to undertaking/enterprise of Indian companies undergoing amalgamation or demerger after 31.3.2007. 35.1-35.2 80-IA(4)(i) Explanation. Expansion of the scope of "infrastructure facility" for the purposes of tax benefit under section 80-IA. 36.1-36.3 80-IA(4)(v)(b). Extension of time limit for generation or transmission or distribution of power by an undertaking of an Indian company set up for reconstruction or revival of a power generating plant. 37.1-37.3 80-IA(4)(vi), 80-IA(2), 80-IA(3). Deduction in the case of an undertaking laying and operating cross-country natural gas distribution network. 38.1-38.6 80-IB(4) fourth proviso. Extension of time limit for setting up industrial undertakings in the State of Jammu and Kashmir for the purpose of tax benefit under section 80-I....
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....eme under Section 194A. 53.1-53.5 194C(1). Expansion of scope of the provisions of section 194C. 54.1-54.6 194H, 194H third proviso. Increase in the rate of TDS under section 194H to 10% and exemption from TDS thereunder from commission payable by Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited to their PCO franchisees. 55.1-55.5 194-I(a), 194-I(b), 194-I(c). Reduction in the rate for deduction of tax at source on rent for the use of any machinery or plant or equipment under Section 194-I. 56.1-56.4 194J(1). Enhancement of the rate of TDS under section 194J of the Income-tax Act. 57.1-57.4 197A(1C). Omission of reference to omitted section 88B from section 197A. 58.1-58.3 132B(4)(a), 201(1A), 245D(6A), second schedule Rule 60(1)(a), second schedule Rule 68A(3) Change of method for calculation of interest from per annum basis to per month basis. 59.1-59.6 206C(1C) Explanation 1, 206C(1C) Explanation 2. Definition of the expression "mining and quarrying" under section 206C of the Income-tax Act, 1961. 60.1-60.4 245A(b), 245A(g), 245C(1), proviso,....
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.... 22H(1) second proviso, 22HA, 22HAA, 22K. Revised Settlement Scheme. 61.1-61.17 42D. Clarification in respect of presumption as to seized books of account, money, bullion, jewellery or other valuable article or thing to other proceedings under the Income-tax Act. 69.1-69.4 Finance Act, 2005. Chapter VII Section 94(5), Chapter VII Section 94(8)(a), Chapter VII Section 94(8)(b)(i). Exclusion of office or establishment of the Central Government or the Government of a State and enhancement of exemption limit the provisions of a banking Cash Transaction Tax (BCTT). 71.1-71.4 finance Act, 2007 Finance Act, 2007 - Explanatory Notes on provisions relating to Direct Taxes Circular No. 03 /2008, Dated 12^th March, 2008 1. Introduction 1.1 The Finance Act, 2007 (hereafter referred to as the Act) as passed by the Parliament, received the assent of the President on the 11^th day of May, 2007 and has been enacted as Act No. 22 of 2007. This circular explains the substance of the provisions of the Act relating to direct taxes. 2. Changes made by the Finance Act, 2007 2.1 The Finance Act, 2007 (her....
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.... of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a cooperative society, firm, local authority and company) as under: Income chargeable to tax Rate of income-tax Individual (other than individual resident woman and resident senior citizen), HUF, association of persons, body of individuals and artificial juridical person Individual woman resident in India and below the age of sixty- five years Individual senior citizen, resident in India, who is of the age of 65 years or more Upto Rs. 1,00,000 Nil Nil Nil Rs. 1,00,001-1,35,000 10% Rs. 1,35,001 - Rs. 1,50,000 10% Rs. 1,50,001 - Rs. 1,85,000 20% 20% Rs. 1,85,001 - Rs. 2,50,000 20% Exceeding Rs. 2,50,000 30% 30% 30% 3.1-4 Surcharge- In the case of every individual, Hindu undivided family, association of persons or body of individuals, surcharge shall be levied only where the total income exceeds Rs. 10,00,000/-. For this purpose, the income-tax on such income shall be reduced by the amount of rebate of i....
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....per cent. shall be levied. Education Cess shall be levied at the rate of two per cent. on the amount of tax computed, inclusive of surcharge. 3.1-9. Local authority - In the case of every local authority, the rate of income-tax has been specified at thirty per cent. in Paragraph D of Part I of the First Schedule to the Act. No surcharge shall be levied. Education Cess shall be levied at the rate of two per cent. on the amount of tax computed. 3.1-10. Company - In the case of a company, the rate of income-tax has been specified in Paragraph E of Part I of the First Schedule to the Act. In case of a domestic company, the rate of income-tax is thirty per cent. of the total income. The amount of income-tax computed shall be enhanced by a surcharge of ten per cent. Education Cess shall be levied at the rate of two per cent. on the amount of tax, inclusive of surcharge. In the case of a company other than a domestic company, royalties received from Government or an Indian concern under an approved agreement made after 31-3-1961, but before 1-4-1976 is chargeable to tax at the rate of fifty per cent. Similarly, fees for rendering technical services received by such company from G....
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....tax deducted, inclusive of surcharge, if any, in all cases. For instance, if such tax is Rs. 1,00,000/- and the surcharge is Rs. 10,000/-, then the education cess of two per cent. is to be computed on Rs. 1,10,000/- which works out to be Rs. 2,200/-. In addition, the amount of tax deducted and surcharge shall be further increased by an additional surcharge called "Secondary and Higher Education Cess on income-tax" at the rate of one per cent. in all cases. Thus in the earlier illustration, where the amount of tax deducted is Rs. 1,00,000/-, the surcharge is Rs. 10,000/-, the Education Cess of two per cent. is Rs. 2,200/-, the said Secondary and Higher Education Cess will be computed on Rs. 1,10,000/- which works out to be Rs. 1,100/-. The total cess in this case will amount to Rs. 3,300/- (i.e. Rs. 2,200/- + Rs. 1,100/-). 3.3 Rates for computation of advance tax, deduction of income-tax at source from Salaries, and charging of income-tax in certain cases during the financial year 2007-08. 3.3-1 The rates for deducting income-tax at source from Salaries and computing advance tax during the financial year 2006-07 have been specified in Part III of the First Schedule to ....
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....ount of rebate of income-tax computed under Chapter VIII-A. The income-tax so reduced shall thereafter be enhanced by a surcharge for the purposes of the Union at the rate of ten per cent. of such income-tax. Marginal relief shall be provided to ensure that the additional amount of income-tax payable, including surcharge, on the excess of income over Rs. 10,00,000/- is limited to the amount by which the income is more than Rs. 10,00,000/- as illustrated in para 3.1-4. 3.3-4 In the case of artificial juridical person, surcharge shall be levied at the rate of ten per cent. of the income-tax payable on all levels of income. 3.3.5 In respect of fringe benefits chargeable to tax under section 115WA of the Income Tax Act, in the case of every association of persons and body of individuals, surcharge shall be levied at the rate of ten per cent, where the fringe benefits exceed ten lakh rupees. In the case of artificial juridical person, surcharge shall be levied at the rate of ten per cent. irrespective of the amount of fringe benefits. 3.3-6 Education Cess- An additional surcharge called the "Education Cess on income-tax" shall continue to be levied at the rate o....
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....f every local authority, the rate of income-tax has been specified at thirty per cent. in Paragraph D of Part III of the First Schedule to the Act. No surcharge shall be levied. However, "Education Cess on Income-tax" and "Secondary and Higher Education Cess on income-tax" shall be levied at the rate of two per cent. and one per cent. respectively of the amount of tax computed. No marginal relief shall be available in respect of Education Cess. 3.3-10 Companies - In the case of a company, the rate of income-tax has been specified in Paragraph E of Part III of the First Schedule to the Act. In case of a domestic company, the rate of income-tax is thirty per cent. of the total income. The tax computed shall be enhanced by a surcharge of ten per cent. only where such domestic company has total income exceeding one crore rupees. In the case of a company other than a domestic company, royalties received from Government or Indian concern under an approved agreement made after 31-3-1961, but before 1-4-1976 shall be taxed at fifty per cent. Similarly, in the case of fees for technical services received by such company from Government or Indian concern under an approved agreement ....
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....wers and functions conferred on or assigned to an Assessing Officer under this Act. The Income-tax authorities- "Additional Commissioner" and "Additional Director" were not specifically mentioned in the said definition because "Additional Commissioner" and "Additional Director" were included in the definition of Joint Commissioner and Joint Director respectively under clauses(28C) and (28D) of the section(2) respectively. However, in order to further clarify the intension of the legislature with regard to the meaning of the term "Assessing Officer", the following amendments have been carried out through the Finance Act, 2007:- (i) Clause (7A) of Section 2 has been amended so as to include Additional Commissioner in the said clause. This amendment will take retrospective effect and will be effective from 1st June, 1994. (ii) Clause (7A) of Section 2 has been amended so as to include Additional Director in the said clause. This amendment will take retrospective effect and will be effective from 1stOctober, 1996. (iii) Clause (IC) has been inserted in section 2 so as to provide that "Additional Commissioner" means a person appointed to be an Addit....
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....the definition of Capital assets. These capital assets will attract capital gains tax from Assessment Year 2008-09 onwards. [Section 3] 6. New definition of India. 6.1 The definition of 'India' is provided in section 2(25A) of the Income-tax Act, 1961. Under this definition, India is deemed to include the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry as respects any period for the purposes of section 6 and as respects any period included in the previous year, for the purposes of making any assessment for the assessment year commencing in the 1.4.1963, or for any subsequent assessment year. Clause (ka) of section 2 of the Wealth tax Act, 1957 provides a similar definition of India for the purposes of wealth tax. 6.2 The Double Taxation Avoidance Agreements (DTAAs) entered into by India provide a wider definition of 'India' vis-à-vis the Income-tax Act, 1961. Hence, with a view to provide a comprehensive definition of India, the existing definition has been substituted by a new definition, whereby "India" means the territory of India as referred to in Article 1 of the Constitution, its territorial waters....
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.... to actually accrue or arise in India to be deemed to accrue or arise in India. The source rule is also recognized in India's Double Taxation Avoidance Agreements. Further, section 5, which defines scope of total income, is subject to other provisions of the Act, including section 9, and the income deemed to accrue or arise in terms of section 9 gets covered under section 5. 7.3 Recent judicial opinion has held that despite the deeming fiction in the said section, for any such deemed income to be taxable in India, there must be sufficient territorial nexus between such income and the territory of India. It has been held that where any sum is payable to a non-resident by a resident, the deeming sweep of the said section cannot bring to tax, any income of a non-resident received outside India from an Indian concern for services rendered outside India. In regard to fees for technical services, it has been specifically held that for the fees to be taxable in India, the services have not only to be utilized in a business in India, but also have to be rendered in India. 7.4 In view of the above judicial opinion, a need was felt to reiterate the leg....
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....capacity of the community of the affected area. 8.4 Applicability - This amendment will take effect retrospectively from the 1^st day of April, 2005 and will, accordingly, apply in relation to the assessment year 2005-2006 and subsequent assessment years. [Section 6] 9. Exemption for interest on notified bonds issued by State Pooled Finance Entities. 9.1 Under the existing provisions of sub-clause (vii) of clause (15) of section 10, interest on bonds issued by a local authority and specified by the Central Government by notification in the Official Gazette, is exempt from income-tax. 9.2 State Pooled Finance Entities have been set up to issue debt securities on behalf of urban local bodies in terms of the Guidelines for the Pooled Finance Development Scheme notified by the Ministry of Urban Development. 9.3 The interest on such bonds does not enjoy exemption under th....
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.... and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent assessment years. [Section 6] 12. Substitution of the power of notification of certain charitable and religious entities by power of approval by the prescribed authority. 12.1 Under sub-clauses (iv) and (v) of clause (23C) of section 10, the income of the funds, trusts and institutions referred to therein is exempt from tax if they are notified by the Central Government. Sub-clause (iv) relates to any fund or institution established for charitable purposes having importance throughout India or throughout any State or States. Sub-clause (v) relates to any trust (including any other legal obligation) or institution wholly for public religious purposes or wholly for public religious and charitable purposes. 12.2 As the existing procedure of centralised notification by the Central Government for the purpose of claiming exemption was found to be time-consuming and cumbersome, a need was felt to streamline such procedure. Accordingly, the said sub-clauses have been amended to substitute such procedure of notification by the Central Government by a new procedure....
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....ection Funds, set up by recognized stock exchanges in India, either jointly or separately, is exempt from income-tax. 13.2 Under the Income-tax Act, Investor Protection Funds of commodity exchanges do not enjoy such exemption even though they are similarly placed. A need was therefore felt to provide exemption to Investor Protection funds set up by commodity exchanges on the lines of the exemption presently available to Investor Protection Funds set up by recognised stock exchanges. Accordingly, a new clause (23EC) has been inserted in section 10 to provide exemption for any income, by way of contributions received from commodity exchanges and the members thereof, of such Investor Protection Fund, set up by commodity exchanges in India, either jointly or separately, as the Central Government may, by notification in the Official Gazette, specify in this behalf. This amendment will enable Investor Protection Funds of commodity exchanges to have adequate funds for undertaking activities relating to the welfare of investors. 13.3 Further, as stipulated in clause (23EA), it has also been provided in new clause (23EC) that where any amount standing to the credit of the sa....
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....apacity of more than three thousand; or (H) developing or operating and maintaining or developing, operating and maintaining any infrastructure facility as defined in the Explanation to clause (i) of sub-section (4) of section 80-IA; or (ii) dairy or poultry industry. 14.3 Applicability- This amendment will take effect from the 1^st day of April, 2008 and will accordingly apply in relation to the assessment year 2008-2009 and subsequent assessment years. [Section 6] 15. Tax benefit only for new unit in Special Economic Zone (SEZ). 15.1 Section 10AA of the Income-tax Act provides that in computing the total income of an entrepreneur, from his unit in the Special Economic Zone(SEZ), the following deduction shall be allowed:- (i) hundred per cent. of profits and gains derived from the export made in eligible business for a period of five consecutive assessment years beginning from the year in which such business commences; (ii) fifty per cent. of such profits and gains for further five assessment years; and (iii) an amount not exceeding fifty per cent of the profit debited to the profit and loss account of the previou....
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....emption, inter alia, the trust or institution is required to make an application for registration under clause (a) of section 12A in the prescribed form and in the prescribed manner to the Commissioner within one year from the date of its creation or establishment and such trust or institution has to be registered under section 12AA. 16.2 Where such application is made after one year, the Commissioner has the powers to condone such delay, if he is satisfied that the trust or institution was prevented from making the application within the specified time limit for sufficient reasons. If the Commissioner is so satisfied, the exemption under sections 11 and 12 shall apply to such trust or institution from the date of creation of the trust or establishment of the institution. However, where the Commissioner is not so satisfied, the exemption shall become applicable only from the 1^st day of the financial year in which the application is made. 16.3 A need has been felt to streamline the procedure relating to the registration of charitable or religious trusts or institutions. In line with such intention, the abovementioned clause (a) has been sunset by restricting its applicab....
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....in companies by certain entities has been permitted. 17.2However, under sub-clause (iii) of clause (d) of sub-section (1) of section 13, exemption under the provisions of section 11 or section 12 is not allowable in respect of the income of a trust or institution, if any shares are held by it for any period during the previous year after 30.11.1983. The only exception which has been provided is for shares held in a public sector company by the trust or institution. 17.3This had resulted in an anomalous situation whereby share investment is allowed as a permitted form or mode of investment under section 11(5)(xii) read with rule 17C, whereas such share investment stands prohibited under section 13(1)(d)(iii). 17.4With a view to harmonise the provisions of section 13(1)(d)(iii) with those of section 11(5)(xii), sub-clause (iii) of clause (d) of sub-section (1) of section 13 has been substituted with a new sub-clause. This new sub-clause provides that the provisions of section 11 and section 12 shall not apply in respect of any income of a charitable or religious trust or institution, if for any period during the previous year, any shares in a company are held by the trust or....
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....ommodation is located in a city having population exceeding four lakhs and 7.5 % for other cities, based on the census of 1991. 18.3 The perquisite value so determined was to be reduced by the amount, if any, recovered from or paid by the employee. Rule 3 was further amended in 2005 so as to increase the rate of 10% to 20% and 7.5% to 15%. Further, the base for population was changed to 2001 census. 18.4 The constitutional validity of rule 3 relating to the perquisite value of residential accommodation as amended by SO. No. 940 (E) dated 25.9.2001 was challenged before various High Courts and before the Supreme Court. 18.5 The Hon'ble High Court of Jharkhand has, in the case of the Tata Workers Union and another Vs Union of India (256 ITR 725), upheld the validity of rule 3 as amended by notification S.O. No. 940(E) by holding that 'the impugned notification does not suffer from any arbitrariness because in our considered opinion, for rationalising and simplifying the procedure, the Board brought about the impugned notification otherwise on account of cumbersome procedure as per the old rule various difficulties were being faced.' 18.6 The Hon'ble Supreme Court, i....
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....er other than the Central Government or State Government - valuation will be 15% of salary; · For unfurnished accommodations located in cities having population of more than 10 Lakh but not more than 25 Lakh and is provided by an employer other than the Central Government or State Government - valuation will be 10% of salary; · For unfurnished accommodations located in other area and is provided by an employer other than the Central Government or State Government - valuation will be 7.5% of salary; · For unfurnished accommodation provided by Central Government or State Government - the valuation will be the licence fee · In case of unfurnished lease property, the valuation will be 15% of the salary or lease rental which ever is lower · In case furniture is provided, the actual hire charge (in case the furniture is hired from third party) or 10% of cost of furniture (if the furniture is owned by the employer) is to be added · In case any part of rent is being recovered from or paid by the employee, the valuation arrived above shall be reduced by that amount. · The population shall be as per 2001 census. 18.10&....
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....ity, etc in residual cases relating to any employer. These sub-rules shall take effect from the 1^st day of April, 2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent years. [Section 11] 19. Weighted deduction under clause (1) of sub-section (2AB) of section 35 to be allowed for five more years. 19.1 The existing provisions of clause (1) of sub-section (2AB) of section 35, allowed in the case of a company, engaged in the business of biotechnology or in the business of manufacture or production of any drugs, pharmaceuticals, electronic equipment, computers, telecommunication equipment, chemicals or any other article or thing notified by the Board, a deduction of a sum equal to one and one-half times of the expenditure incurred on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority. 19.2 The existing provisions were not applicable in respect of any expenditure incurred by a company after 31^st March, 2007 and no weighted deduction against expenditure incurred after that date was admissible. 19.3 Consideri....
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....0, the expression "scheduled bank" was defined to have the meaning assigned to it in clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36 which does not, inter alia, include co-operative banks. However, the definition of "scheduled bank" has been amended to include scheduled co-operative banks. The referral definition of "scheduled bank" occurring in the Explanation to the aforesaid item (fa) did not allow exemption of interest payable to a non-resident or a not ordinarily resident by a co-operative bank. In order to continue with this position, the definition of "scheduled bank" in its pre-amended form in clause (ii) of Explanation to clause (viia) of sub-section (1) of section 36 has being substituted for the existing Explanation in the aforesaid item (fa) so that the scope of the exemption allowed under the aforesaid item (fa) is not changed. 20.6 The amendment to the definition of "scheduled banks" as it appears in clause (viia) of sub-section (1) of section 36 will also have the effect of making the provisions of section 43D applicable to scheduled co-operative banks. 20.7 Applicability - These amendments will take effect, retrospe....
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....; has markedly improved. 21.4 The Finance Act, 2007, therefore, has limited the deduction to twenty per cent. of the profits derived from the business of providing long-term finance. Considering the provision for outer limit to the deduction, which is twice the amount of the paid-up share capital and of the general reserves, the reduction in the level of deduction to twenty per cent will have the effect of elongating the time period during which the deduction can be claimed by the beneficiary "specified entities". Effectively therefore the specified entities are not adversely affected in the long term. 21.5 The provision has also been restructured to provide for different categories of entities (which now also includes co-operative banks) and their respective activities for eligibility of the deduction under the said clause. For claiming deduction under the said clause, (i) a financial corporation specified in section 4A of the Companies Act or a financial corporation which is a public sector company or a banking company or a co-operative bank (other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank) has to be engaged....
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.... credited to the ERAF was also exempted from tax. The exemption to ERAFs under section 10(23E) was withdrawn by the Finance Act, 2002 from assessment year 2003-04 on the ground that the operations of these funds were on a commercial line whereby they were collecting an exchange risk premium from borrowers of foreign currency to meet the actual losses on account of exchange fluctuation. ERAFs had been in existence for a considerable time since 1989 and it was felt that tax exemption to them had outlived the utility. Exemption under clause (14A) of section 10 was also withdrawn simultaneously. 22.4 The foreign exchange scenario in India has undergone a sea change since the launching of ERAS. There are several options available in the market for borrowers to hedge their foreign exchange risk. Responding to changed market dynamics ERAFs have been discontinued by the Industrial and Development Bank of India (IDBI), Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency (IREDA). The clause (x) of sub-section (1) of section 36 had, therefore, outlived its utility. 22.5 The Finance Act, 2007, accordingly, has omitted clause (x) fr....
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....has been notified under clause (xiv) of sub-section (1) of section 36 of the Income-tax Act, 1961 vide Notification No. S.O. 1569(E) Dated 18^th September, 2007. [Section 13] 25. Strengthening the provisions of section 40A(3). 25.1 The existing provisions of sub-section (3) of section 40A provided for disallowance of twenty per cent of the expenditure incurred, payment in respect of which is made in a sum exceeding twenty thousand rupees, otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft. 25.2 The said sub-section was inserted by the Finance Act, 1968 providing for disallowance of hundred per cent of the expenditure, if payment was made in contravention of its provisions. Subsequently, the Finance Act, 1995 amended this sub-section with effect from 1^st April, 1996 to restrict the disallowance to twenty per cent of the expenditure, payment against which is made in violation of its provisions. 25.3 The provisions of the said sub-section were to act as an anti-evasion measure. It has come to notice that substitution of the disallowance of hundred per cent. by twenty per cent. has diluted the deterrence potential of t....
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....the Board have issued Notification No. S.O. 1044(E) dated 27^th June, 2007 substituting Rule 6DD of the Income-tax Rules, 1962 containing exceptions to the provisions of sub-section (3) of section 40A. The exceptions now provided in the newly notified Rule 6DD include payments by the use of electronic clearing system through a bank account, a credit card and a debit card. The exceptions also include now payments upto Rs. 50,000/- on account of terminal benefits without reference to any salary ceiling. Considering the spread of banking services across the Country, exception earlier provided to payments made to various state level industrial development corporations and National Industrial Development Corporation has been withdrawn in the new Rule. The new Rule shall come into force with effect from the assessment year 2008-2009. 25.7 Applicability - This amendment will take effect from 1-4-2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years. [Section 14] &nbs....
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....he transfer become the assets and liabilities of the resulting co-operative bank; (ii) the assets and the liabilities are transferred to the resulting co-operative bank at values (other than change in the value of assets consequent to their revaluation) appearing in its books of account immediately before the transfer; (iii) the resulting co-operative bank issues, in consideration of the transfer, its membership to the members of the demerged co-operative bank on a proportionate basis; (iv) the shareholders holding seventy-five per cent or more in value of the shares in the demerged co-operative bank (other than shares already held by the resulting bank or its nominee or its subsidiary immediately before the transfer), become shareholders of the resulting co-operative bank, otherwise than as a result of the acquisition of the assets of the demerged co-operative bank or any undertaking thereof by the resulting co-operative bank; 26.5 A set of conditions have been provided both in the case of successor and predecessor cooperative banks, which have to be fulfilled for availing the provisions as enumerated in this section. (A) The following conditions have....
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....n' have been defined as under :- (a) accumulated loss means so much of loss of the amalgamating co-operative bank or the demerged co-operative bank, as the case may be, under the head Profits and gains of business or profession (not being a loss sustained in a speculation business) which such amalgamating co-operative bank or the demerged co-operative bank, would have been entitled to carry forward and set-off under the provisions of as if the business reorganisation had not taken place; (b) unabsorbed depreciation means so much of the allowance for depreciation of the amalgamating co-operative bank or the demerged co-operative bank, as the case may be, which remains to be allowed and which would have been allowed to such bank as if the business reorganisation had not taken place; 26.8 With a view to lend clarity to the number of years to be reckoned for the purposes of set off and carry forward of loss and allowance for depreciation, it has been provided that - (i) the period commencing from the beginning of the previous year and ending on the date immediately preceding the date of business reorganisation, and (ii) the period commencing from the date ....
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....her sources'. Under the Proviso thereto, certain exceptions have been provided in respect of any sum of money received from certain specified persons and under certain specified circumstances. 27.2 Vide Taxation Laws (Amendment) Act, 2006, clauses (e), (f) and (g) were inserted in the said Proviso w.e.f. 13.7.2006 so as to provide further exceptions in respect of any sum of money received from any local authority or an entity referred to in clause (23C) of section 10 or any trust or institution registered under section 12AA. 27.3 The aforesaid clause (v) of section 56(2) came into force from 1.4.2005. The same effectivity date has now been given to the abovementioned clauses (e), (f) and (g) of the said Proviso. This amendment will apply in relation to the assessment years 2005-2006 and 2006-2007. 27.4 Further, vide Taxation Laws (Amendment) Act, 2006, a new clause (vi) was inserted in sub-section (2) of section 56, which, inter alia, provided that the whole of the aggregate value of any sum of money exceeding fifty thousand rupees, received without consideration by an individual or Hindu undivided family in any previous year from any person or persons on or af....
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....will not exceed fifty lakh rupees in a financial year. 28.3 Applicability- This amendment will take effect retrospectively from the 1^st day of April, 2007 and will apply in relation to the assessment year 2007-08 and subsequent assessment years. 28.4 The said section has further been amended by substituting the existing clause (b) of explanation to the said section, so as to provide that the Central Government, while notifying such bonds in the Official Gazette may lay down in the said notification such conditions, including the condition for providing a limit on the amount of investment by an assessee in such bonds, as it thinks fit. 28.5 Applicability: This amendment will take effect retrospectively from the 1st of April, 2006. 28.6 Further, a proviso has been inserted in the said clause (b), so substituted, so as to provide that where any bond has been issued before the 1st day of April, 2007, under a notification subject to the conditions specified therein by the Central Government in the Official Gazette under the provisions of said clause (b), as they stood immediately before their amendment by the Finance Act,2007, such bond will be deemed to be a bond not....
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.... during the previous year by the employee to his account (maximum 10% of salary) or by the employer to employee's account (maximum 10% of salary), under a Central Government notified pension fund, is allowed as deduction. By Finance Act, 2007, this section has been amended to extend the benefit to individuals employed by any other employers on or after 1^st January, 2004, as well. Consequential amendments have been carried out in section 7 and section 17 to provide that the contribution by any other employer in the previous year, to the account of an employee under a pension scheme, referred to in section 80CCD, shall be deemed to be the income received in India (section 7) and shall be taxed under the head "salary" (section 17). 31.2 Applicability- This amendment will take effect retrospectively from 1-4-2004 and will accordingly apply in relation to assessment year 2004-05 and subsequent assessment years. [Section 4,11 & 25] 32. Rationalization of provisions related to deduction of health insurance premium. 32.1 Section 80D of the Income-tax provides that in computing the total income of an assessee, being an individual or a Hindu undivided family, th....
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....espite resource constraints. Till assessment year 2007-08, the benefit was available only to an individual for his own education. By Finance Act, 2007, section 80E has been amended to extend the deduction available under this section to any individual for the payment made by way of interest on loan taken by him for higher education of his relative (i.e. spouse and children) as well. 33.2 An amendment has also been carried out in clause (a) of sub-section (3) of section 80E in the definition of "approved charitable institution". The requirement of approval by the prescribed authority under clause (23C) of section 10 has been replaced with the notification by the Central Government. This is a consequential amendment due to change in procedure from approval to notification under clause (23C) of section 10. 33.3 Applicability- These amendments will take effect from 1-4-2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years [Section 27] 34. Clarification regarding developer with reference to infrastructure facility, industrial park, etc. for the purposes of section 80-IA. 34.1 Section 80-IA p....
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....mpany in a scheme of amalgamation or demerger, the provisions of the said section 80-IA shall apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place. The main intention in providing benefit under section 80-IA had been to provide incentive to those who had taken initial investment and entrepreneur risk. Hence, it was felt that there was no justification for passing on the benefit to someone who had not taken these risks and had only acquired the eligible undertaking much later when the risks had reduced. Hence, a new sub-section (12A) has been inserted in section 80-IA so as to provide that the provisions of sub-section (12) shall not apply to any undertaking or enterprise which is transferred in a scheme of amalgamation or demerger after 31.3.2007. Thus, if an undertaking or an enterprise is transferred in a scheme of amalgamation or demerger after 31.3.2007, the benefit of deduction under section 80-IA will not be available to the amalgamated or demerged undertaking or enterprise. The content of this circular will supercede whatever contrary has been stated, on th....
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....rating plant, the time limit for generating or transmitting or distributing power has been extended by one year i.e. the undertaking should begins to generate or transmit or distribute power before 31^st March 2008. 37.3 Applicability- This amendment will take effect from the 1^st day of April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent assessment years. [Section 28] 38. Deduction in the case of an undertaking laying and operating cross-country natural gas distribution network. 38.1 Sub-section (4) and (5) of section 80-IA specify the activities eligible for deduction under the said section. Considering the fact that tax subsidy for gas pipelines will enable substitution of the existing subsidy on LPG, a new clause (vi) in the said sub-section (4) of section 80-IA has been inserted so as to provide that any undertaking carrying on the business of laying and operating cross-country natural gas distribution network, including gas pipelines and storage facilities being an integral part of the network, shall be eligible for deduction under the said section if;- · it is owned by a company registered in In....
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....80-IB(4). 39.1 Under the existing provisions contained in sub-section (4) of section 80-IB, industrial undertakings engaged in manufacture or production of articles or things or operation of a cold storage plant and set up during the period beginning on 1^st April, 1993 and ending on 31^st March, 2007 in the State of Jammu and Kashmir, are eligible for a hundred per cent. deduction of profits for a period of five assessment years, followed by twenty-five per cent. (thirty per cent. in the case of a company) for the next five assessment years. The deduction is subject to a negative list of articles or things specified in Part-C of the Thirteenth Schedule to the Income-tax Act, which should not be manufactured or produced by such industrial undertakings. 39.2 With a view to promote the industrial development of the State of Jammu and Kashmir, the terminal date for setting up of industrial undertakings and commencement of eligible business in the State has been extended by five more years, i.e., from 31.3.2007 to 31.3.2012. 39.3 Applicability- This amendment will take effect from the 1^st day of April, 2008 and will, accordingly, apply in relation to the assessment year....
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....o sub-section (3) of section 80-IA shall also apply to this condition; · the assessee should furnish along with the return of income, the report an audit in such form and containing such particulars as may be prescribed, and duly signed and verified by an accountant certifying that the deduction has been correctly claimed; · in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or in section 10AA, in relation to the profits and gains of the undertaking; · provisions contained in sub-section (5) and sub-sections (8) to (11) of section 80-IA shall, so far as may be, apply to the eligible business under this section; and · for the purpose of this section, hotel shall mean a hotel of two-star, three-star and four-star category as classified by the Central Government and specified area shall mean the National Capital Territory of Delhi and districts of Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad. 40.5 The Central Board of Direct Taxes have notified Rule 18DE and Form 10CCBBA vide notification no. S.O. 1989(E), dated 27^th November, 2007, prescribing area, size, numbers ....
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....ar category) · Adventure and leisure sports including ropeways; · Providing medical and health services in the nature of nursing home with a minimum capacity of 25 beds; · Running an old-age home; · Operating vocational training institute for hotel management, catering and food craft, entrepreneurship development, nursing and para-medical, civil aviation related training, fashion designing and industrial training; · Running information technology related training centre; · Manufacturing of information technology hardware; and · Bio-technology. 41.5 The deduction under this section is available for ten consecutive assessment years commencing from initial assessment year, i.e., assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or has completed substantial expansion or begins eligible business. 41.6 The following conditions have also been prescribed in the newly inserted section:- · The undertaking should not be formed by splitting or reconstruction of business already in existence. This condition shall not app....
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.... in relation to assessment year 2004-05 and subsequent assessment years. [Section 22 & 23] 43. Extension of Time limitation for making assessment where a reference is made to the Transfer Pricing Officer 43.1 The existing provisions of the Act does not provide any additional time to the Assessing Officer for completing assessment or reassessment in cases where a reference is made by him under sub-section 92CA to the Transfer Pricing Officer for determination of the Arm's length price of an international transaction. Since, the time limit for selection of cases for scrutiny is one year from the end of the month in which the return was filed; references to Transfer Pricing Officers are made mostly after one year of filing of the return. Thus, Transfer Pricing Officers are not getting adequate time to make a meaningful audit of transfer price in cases referred to them. 43.2 With a view that the Transfer Pricing Officers get sufficient time to make the audit of transfer price and also to provide Assessing Officers sufficient time to make assessment in cases involving international transactions, the time limits specified in sections 153 and 153B for making the as....
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....iness or service, carried on or rendered, by an entrepreneur or a developer in a unit or SEZ. Till enactment of Finance Act, 2007, the method of calculation of MAT under this section also provided for exclusion of income which were either exempt or allowed as deduction under section 10 [except section 10(38)], section 10A, section 10B, section 11 or section 12 of the Income-tax Act. Such exclusion of income from purview of MAT is contrary to the basic principle for introduction of MAT, which provides that every corporate taxpayer participating in the economy must contribute to the exchequer a minimum amount of tax on its book profit. Accordingly, clause (f) and clause (ii) of the explanation occurring after sub-section (2) of section 115JB, have been amended by the Finance Act, 2007 to omit reference to section 10A and 10B. 44.3 Hence, from assessment year 2008-09 and onwards, while calculating MAT under section 115JB, the book profit shall not be increased by the amount or amounts of expenditure relatable to any income to which section 10A or section 10B applies. Similarly, the amount of income to which any of the provisions of section 10A or section 10B apply....
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....5.6 Thus, through the above amendment, a new rate of tax has been specified in respect of income distributed by a money market mutual fund or a liquid fund. The existing rates of tax on income distributed by a fund other than a money market mutual fund or a liquid fund shall remain the same. 45.7 For this purpose, "money market mutual fund" and "liquid fund" have been defined in the Explanation after section 115T. "Money market mutual fund" has been defined therein to mean a money market mutual fund as defined in sub-clause (p) of clause (2) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. Similarly, "liquid fund" has been defined therein to mean a scheme or plan of a mutual fund which is classified by SEBI as a liquid fund in accordance with the guidelines issued by it in this behalf under the Securities and Exchange Board of India Act, 1992 or regulations made thereunder. 45.8 Applicability- These amendments will take effect from 1^st April, 2007. [Section 35,36 & 37] 46. Rationalization of Fringe Benefit Tax. 46.1 In terms of the provisions of Chapter XII-H of the Income-tax Act, an employer, being a company, is liable to....
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....or the specified security or sweat equity shares at a predetermined price. 46.5 The Central Board of Direct Taxes (CBDT) vide notification S.O. No. 1805(E) dated 23^rd October, 2007 has inserted Rule 40C in the income-tax Rules; which has prescribed the method for determination of fair market value of specified security or sweat equity share, being a share in the company. Salient features of this rule are: (i) In a case where, on the date of the vesting of the option, the share in the company is listed on a recognized stock exchange, the fair market value shall be the average of the opening price and closing price of the share on that date on the said stock exchange; (ii) If on the date of vesting of the option, the share is listed on more than one recognized stock exchanges, the fair market value shall be the average of opening price and closing price of the share on the recognised stock exchange which records the highest volume of trading in the share; (iii) If on the date of vesting of the option, there is no trading in the share on any recognized stock exchange, the fair market value shall be,- (a) the closing price of the share on any recognised stock ....
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....in respect of specified security or sweat equity shares, if such security or shares are transferred or allotted to the employee on or after 1^st April, 2007. 46.11 It has been prescribed that the employer can vary the agreement or scheme under which such specified security or sweat equity shares has been allotted or transferred. The agreement or scheme can be varied with a purpose to recover from the employee the fringe benefit tax to the extent to which such employer is liable to pay the fringe benefit tax in relation to the allotment or transfer of such specified security or sweat equity shares to such employee. 46.12 The above amendments are explained with the help of an illustration. Illustration: A company 'X' grants option to its employee 'R' on 1^st April, 2004 to apply for 100 shares of the company at a pre-determined price of Rs. 50/- per share with date of vesting of the option being 1^st April, 2006 and exercise period being 1^st April, 2006 to 31^st March, 2010. Employee 'R' exercises his option on 31^st March, 2007 and shares are allotted/transferred to him on 3^rd April, 2007. On 25^th October, 2007 these shares are sold for Rs. 200/....
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.... on his own accord. 47.2 Sub-section (2) of section 115WJ provided that the advance tax payable in the financial year on the value of the fringe benefits referred to in section 115WC, shall be payable on or before the 15^th day of the month following each quarter. However, the advance tax payable for the quarter ending on the 31^st March of the financial year shall be payable on or before the 15^th day of March of the said financial year. 47.3 Sub-section (3) of section 115WJ provided that where an assessee has failed to pay the advance tax for any quarter or where the advance tax paid by him is less than thirty per cent. of the value of fringe benefits paid or payable in that quarter, he shall be liable to pay simple interest at the rate of one per cent. on the amount by which the advance tax paid falls short of, thirty per cent. of the value of fringe benefits for any quarter, for every month or part of the month for which the shortfall continues. 47.4 Sub-section (2) of the said section has been substituted so as to provide that the amount of advance tax on the current fringe benefits shall be payable by all the companies, who are liable to pay the same, in four i....
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....h comprised in the period from 1^st April next following such financial year till the date of assessment of tax under section 11WE or section 115WF or section 115WG. This interest is in addition to the interest leviable under sub-section (3) or sub-section (4). 47.8 Vide notification S.O. No.1805(E) dated the 23^rd of October 2007, the Central Board of Direct Taxes has inserted Rule 40C in the Income Tax Rule 1962 for valuation of shares in a company for Fringe benefit on ESOPs. This rule shall take effect from 1^st April, 2008 and accordingly; apply in relation to the assessment year 2008-2009 and subsequent years. 47.9 Since the rule relating to valuation were notified on 23^rd October 2007, the CBDT had earlier extended the date of payment of first and second instalment of Fringe Benefit Tax, (which was to be paid on or before June 15, 2007, and September 15, 2007) in respect of transfer or allotment of specified security or sweat equity shares to its employees, to the 15th of December, 2007 (the date of payment of third instalment). 47.10 It is also seen that there could be cases where employees after being allotted or transferred such specified security or sweat ....
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....ch the return of income in electronic form may be furnished; the documents, statements, receipts. certificates or audited reports which may not be furnished along with the return of income in electronic form but have to be produced before the Assessing Officer on demand; the computer resource or the electronic record to which the return of income in electronic form may be transmitted. 48.5 Consequentially, new clauses (eeba) and (eebb) in sub-section (2) of section 295 have been inserted which provides for rule making powers of the Board. 48.6 As the provisions contained in the proviso to sub-section (9) of section 139 has been incorporated in the new sections 139Cand 139D, the proviso to the explanation to sub-section (9) of section 139 has been omitted. 48.7 Applicability- These amendments will take effect retrospectively from the 1^st day of June, 2006. [Sections 44, 45 & 79] 49. Rationalisation of provision relating to special audit under section 142 (2A). 49.1The existing provisions of sub-section(2A) of section 142, provides that at any stage of the proceedings before him, if the Assessing Officer having regard to the nature and complexity of the ....
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....Hon'ble Court observed that the decision in the case of Rajesh Kumar and others does not appear to be the correct position of law and accordingly referred the matter to a larger bench. The Court also directed that the order directing the Special Audit shall be operative and assessment proceedings, if any, shall continue subject to the outcome of the petition in this case. The decision of the Larger Bench is awaited. 49.3 There is no legislative intent to allow the assessee an opportunity of being heard before ordering a special audit under sub-section (2 A) of section 142 of the Income tax Act. Accordingly the Income Tax Department has over the years ordered a large number of special audits without giving any opportunity to the tax payer of being heard. While it is not feasible to give effect to the ratio of the decision of the Hon'ble Supreme Court in the case of Rajesh Kumar and others in view of the large number of cases where such audit has been ordered in the past, respectfully following the decision of the Honbl'e Supreme Court in the said case, a proviso has been inserted in sub-section (2A) of section 142 providing that the Assessing Officer shall not direct the assessee....
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....of departure of the ship subject to certain conditions. The existing provisions of the said section, however, did not provide for a time limit for completion of assessment in respect of a return furnished under sub-section (3) thereof. 51.2 The Finance Act, 2007, therefore, has inserted a new sub-section (4A) providing that no order assessing the income and determining the sum of tax payable thereon shall be made under the said section after the expiry of nine months from the end of the financial year in which the return under sub-section (3) is furnished. 51.3 The Finance Act, 2007 has further inserted a proviso to the newly inserted sub-section (4A)so as to providethat where a return under sub-section (3) is furnished before the 1^st day of April, 2007, the order assessing the income and determining the sum of tax payable thereon may be made at any time up to the 31^st day of December, 2008. This will give a longer time limit of 21 months to complete all pending assessments under section 172. 51.4 Applicability - These amendments will take effect retrospectively from the 1^st day of April, 2007. [Section 51] 52. Amendment of section 193 of the Income-tax Act, ....
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....spect of payment of interest to residents without deduction of tax at source. 53.4 The Central Government have, vide notification No. S.O. 861 (E) dated 1^st June, 2007, notified the Senior Citizens Savings Scheme, 2004 for the purposes of sub-clause (c) of clause (i) of sub-section (3) of section 194-A of the Income-tax Act. By virtue of this notification, no tax will be required to be deducted at source under section 194A of the Income-tax Act, 1961 on interest credited or paid or likely to be credited or paid on any deposit made under Senior Citizens Savings Scheme, 2004, where such interest does not exceed ten thousand rupees during the financial year. 53.5 Applicability- This amendment will take effect from the 1^st day of June, 2007. [section 53 & 60] 54. Expansion of scope of the provisions of section 194C. 54.1 The existing provisions of sub-section (1) of section 194C provided for deduction of income-tax at source from any sum credited or paid to the resident contractor for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and the Government, local authorities, statutory ....
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....income remains below taxable limit merely results in unnecessary paper work. Public Call Office (PCO) franchisees of Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited represent this category as very small sums of commission are received by them and there would be very few such cases where income would be above the threshold exemption limit. 55.3 The Finance Act, 2007 has, therefore, amended the said section to provide that tax shall not be deducted on payments of commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchisees. 55.4 Many cases have come to notice where tax incidence in the case of recipient of commission or brokerage is much higher than the amount of tax collected at the rate of five per cent. This had resulted in either deferment in collection of taxes or escapement of income in some cases. This problem has been addressed by the Finance Act, 2007 by enhancement of the existing rate of five per cent. for deduction of tax at source to ten per cent. 55.5 Applicability- This amendment will take effect from the 1^st day of June, 2007. [Section....
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....tax deduction at source. The increased rate for deduction of tax at source shall be applicable to payment of any sum by way of fees for professional services or fees for technical services or royalty or any sum referred to in clause (va) of section 28. 57.4 Applicability- This amendment will take effect from the 1^st day of June, 2007. [Section 57] 58. Omission of reference to omitted section 88B from section 197A. 58.1 The existing provisions of sub-section (1C) of section 197A contained reference to section 88B which was omitted with effect from 1^st April, 2006. 58.2 The Finance Act, 2007 has deleted the reference to the omitted section 88B from the said sub-section. 58.3 Applicability- This amendment will take effect retrospectively from 1^st April, 2006 and will, accordingly, apply in relation to the assessment year 2006-2007 and subsequent assessment years. [Section 58] 59. Change of method for calculation of interest from per annum basis to per month basis. 59.1 Sub-section (1A) of section 201 provided that the person who has not deducted the whole or any part of the tax or aft....
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....sed to be amended. However, in respect of any period commencing on or before 31^st March, 2008 and ending after that date, such interest shall, in respect of so much of such period as falls after that date, be calculated on per month basis. 59.6 Applicability- These amendments will take effect on the 1^st day of April, 2008. [Section 43, 59, 64, 81 & 86] 60. Definition of the expression "mining and quarrying" under section 206C of the Income-tax Act, 1961. 60.1 The existing provisions of section 206C provided for collection of tax at source, inter alia, from the licensee or lessee in respect of any licence, contract or lease relating to any 'mining and quarrying' specified in column (2) of the Table in sub-section (1C) of the said section. The rate for collection of tax at source was specified in column (3) of the Table. 60.2 The existing provisions of the said section did not provide for a definition of the expression "mining and quarrying". Representations had been received from a few quarters that this phrase, in the absence of its definition in the section, was being taken to include oil exploration and incidental services and tax was being collected f....
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.... issued. (b) assessment or reassessment proceedings under section 153A for each of six assessment years preceding the assessment year relevant to the previous year in which a search under section 132 was conducted or a requisition under section 132A was made; and also the assessment or reassessment proceedings in case of such persons for the assessment year relevant to the previous year in which the search under section 132 was conducted or the requisition under section 132A was made. These proceedings shall be deemed to have commenced on the date on which the search under section 132 was initiated or the requisition under section 132A was made; (c) proceedings of making fresh assessment where original assessment was set aside under section 254 by the Appellate Tribunal or under section 263 or section 264 by the Commissioner Such proceedings shall be deemed to have commenced from the date on which the order setting aside the original assessment was passed; 61.4 The provisions prescribed that an application can be made only if the additional amount of income-tax payable on the income disclosed in the application exceeds one lakh rupees. This limit has been enhanced to ....
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....erest is not paid on or before the aforesaid date, the application shall be deemed to have been rejected; (b) in respect of applications which were admitted before 1st June, 2007 but order of settlement was not passed before the said date, the tax on the income declared in the application and interest thereon shall have to be paid on or before 31st July, 2007. Tax and interest shall be paid by this date even in cases where the Commission has already granted any extension or instalment for payment of tax beyond the said date. If the tax and interest is not paid on or before 31^st July, 2007, the application shall not be allowed to be further proceeded with and the proceedings before the Commission shall abate on 31st July, 2007. 61.7 If an application made on or after 1st June, 2007 is allowed to be proceeded with, the Settlement Commission shall issue a notice to the Commissioner within 30 days from the date on which the application was received. In case of applications referred to in para 61.6(a) above, if the tax and interest has been paid before 31st July, 2007, such notice shall be issued to the Commissioner on or before the 7th day of August, 2007. The Commissioner shall....
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....provide that the Commission may, if it is necessary or expedient to do so, reopen completed proceedings. The provisions have been amended to provide that the Commission shall not have powers to reopen the completed proceedings in a case where an application under section 245C has been filed on or after 1st June, 2007. 61.13 It has also been provided that, if the application made on or after 1.7.2007 is rejected or such application or an application referred to in para 61.6(a) above is declared invalid or an application referred to in para 61.6(b) above is not allowed to be further proceeded with or the settlement order is not passed within the specified period, the proceedings before the Commission shall abate and the Assessing Officer or other income-tax Authority before whom the proceeding were pending at the time of making the application, as the case may be, shall resume and complete the proceeding. Credit shall be allowed for the tax and interest paid by the applicant by the Assessing Officer. The period from the date on which the application was made before the Commission and upto the date on which proceedings get abated shall be excluded from the time limitation for....
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....ovide that an appeal filed by an assessee in default against an order made under sub-section (6A) of section 206C on or after the 1^st day of April, 2007 but before the 1^st day of June, 2007 shall be deemed to have been filed before the Commissioner (Appeals) under new clause (hb) of sub-section (1) of section 246. 62.5 Applicability - These amendments will take effect from the 1^st day of June, 2007. [Section 71] 63. Provision of appeal by a person denying liability to deduct tax. 63.1 The provisions of section 248, provided that where any person has deducted and paid tax in accordance with the provisions of sections 195 and 200 in respect of any sum chargeable under the Act, other than interest and who denies his liability to make such deductions, may make an appeal to the Commissioner (Appeals) to be declared not liable to make such deductions. 63.2 Section 248 has been substituted, so as to provide that where under an agreement or other arrangement, the tax deductible on any income, other than interest, under section 195 is to be borne by the person by whom the income is payable, and such person having paid such tax to the credit of the Central Gover....
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....ed that the Appellate Tribunal may pass an order of stay in any proceeding relating to an appeal filed before it. In such cases, it was provided that the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order. If the appeal is not decided within the period for which the stay was granted, the stay order should be vacated after the expiry of the stay period. 66.2 Section 254 has been amended so as to provide that the Appellate Tribunal, after considering the merits of the application made by the assessee, may pass an order of stay in any proceeding relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order. The Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order. 66.3 It is further provided that where such appeal is not disposed of within the aforesaid period of stay, the Appellate Tribunal may extend the period of stay or pass an order of stay for a further period or periods as it thinks fit. Such extension in the period of stay is to be granted on an application made in th....
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....therein; or (ii) for any previous year which is to end on after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of section 271, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. However, penalty shall not be levied if certain conditions prescribed therein are fulfilled. 67.5 Explanation 5 has been amended so as to provide that provisions of said Explanation shall be applicable only in a case where search under section 132 was initiated before 1st June, 2007. 67.6 Applicability: The amendment has taken effect from 1st June, 2007 and will be applicable to cases where search under section 132 is initiated on or after 1st June, 2007. 67.7 A new Explanation 5A to sub-section (1) of section 271 has also been inserted so as to provide that where in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of - (i) any money, bullion, jewellery or other valuable ....
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....ome of the specified previous years represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or which has otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of the search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted. 68.3 For the purposes of this section, specified previous year has been defined, so as to mean the previous year — (i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of se....
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....ng or retaining recognition under the Income-tax Act. Clause (ea) of the said rule provides that the fund shall be of an establishment to which the provisions of sub-section (3) or sub-section (4) of section 1 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 are applicable and such establishment has been exempted under section 17 of the said Act from the operation of all or any of the provisions of any scheme referred to in that section. 70.2 With a view to set out the conditions given in clause (ea) in unambiguous terms clause (ea) has been substituted so as to provide that for receiving and retaining recognition under the Income-tax Act, the fund shall be a fund of an establishment to which the provisions of sub-section (3) of section 1 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 apply or of an establishment which has been notified by the Central Provident Fund Commissioner under sub-section (4) of section 1 of the said Act, and such establishment shall obtain exemption under section 17 of the said Act from the operation of all or any of the provisions of any scheme referred to in that section. 70.3 Rule 3 of Part A of th....